May We Talk About the Backstop?

Tuesday, 11 December: Heightened volatility persisted across global asset classes on Tuesday after a disappointing start to the week for markets. The slight resurgence this morning for European markets was likely led from a stable session on Wall Street yesterday that defied losses across Europe. Tech stocks were the best performing as the NASDAQ closed 0.74% higher. We were also without any significant negative data releases to further compound woes, unlike yesterday which saw a slowdown in GDP growth. Wage data was released today, showing the rate at which wages are growing is at its highest level since 2008. Average weekly earnings, excluding bonuses, increased by 3.3% in the three months to October. Average weekly wages are £495, £25,740 a year (adjusted for inflation). This all allowed the pound to also recover some losses after yesterday’s torrid day for the currency.

Throughout the session London shares built on the early recovery to help the FTSE 100 close 1.27% higher. European indices were broadly higher despite a mixed and subdued start over in the US. The UK awaits May’s attempts to try and soften some areas of the deal, if she manages to get out of her car anytime soon. The likely fallout from these meetings Mrs. May has with various EU leaders will slowly filter through this week and we’ve already had European Commission President Juncker state there’s no real room for renegotiation, so good luck Theresa.

In company news WPP sat at the top of the FTSE for the whole session, after unveiling plans to save costs and simplify the business structure. The world’s largest advertisement agency’s turnaround vision was clearly well received by shareholders and investors alike, which looked to make the business easier to work with from a client perspective and better-positioned to adapt to the rapidly changing marketing landscape. They will look to save £275m per year by 2021 and will favour dividends over share buybacks. The vision also echoes just how much work there is to do, but the highly detailed plan for the execution of such has settled investors who will now look to see tangible progress. Shares closed the day +4.8%, bettered only by Wood Group and Anglo, with miners and related energy services firms enjoying a broadly positive day, with oil still teetering at $60 p/bbl.

Ahead of their interim results announcement tomorrow Superdry shares fell over 7% today. It’s been a tough year in contrast to their steady success since IPO. Earlier this year shares reached an all time high, as much as 300% since their launch 8 years ago (see chart below), but have since fallen from over £20 p/share to less than £6, and during October they issued a profit warning in-tune with many other similar high-street names.

Ashtead performed well on the day as shares closed 3.6% higher. It comes as the rental solutions firm announced Q2 profit before tax increased and that they expect full-year results to be ahead of prior expectations.

Carpetright shares jumped 5.8% today, cooling from earlier gains of around 10% despite the news that pre-tax loss for the first half of their year had widened. This is possibly due to the significant hits the share price has already endured after two profit warnings this year, making anything but the hat-trick of warnings a small relief.